For decades, I've been a proponent of habit tracking. Habit tracking sounds and feels nerdy to a lot of folks, so many people avoid it. That's too bad. Habit tracking is a powerful tool that can help you make better decisions about your life.
Let me share an example.
Over at Reaktor, Olof Hoverfält recently published a long piece about why he's tracked every single piece of clothing he's worn for three years.
That's right: For 1000+ days, Hoverfält documented every garment he wore. (And, in fact, he's continuing to document his wardrobe publicly.) Using the info he collected, he's now able to make better decisions about which clothes to keep and which clothes to buy. I love it!
Hoverfält says people worry about how much time it'd take to do something like this but they shouldn't. Most of the time investment is in the initial setup, in that first batch of data entry. Actually using and maintaining the system requires about one minute each day. And the rewards are far greater than the cost in time.
Hoverfält's project is a perfect example of the power of habit tracking.
Kim and I are back from a week-long beach vacation with her brother and his family. We traveled to a luxury timeshare resort where it was super easy to practice social distancing because almost nobody was there. (The place was running at maybe 10% capacity because of COVID, and the level of cleanliness was mind-boggling. I felt safer there than at home! Sanitizer, mask, wipe your feet. Instant-read thermometers. Digital menus. Etc. Etc. Etc.)
This trip was a terrific early test of my spending moratorium resolve. I was mostly good.
The vacation itself cost money, of course, but I'm okay with that. We scheduled it months ago, long before I decided to take a year off from spending. I didn't cancel it, and I'm not canceling the other trip we have planned for March. Instead, my aim is to keep my spending as low as possible for both trips. Plus, I have no plans to book other vacations this year.
Because of my spending moratorium, I deliberately altered my standard vacation behavior. I'm the kind of guy who likes to get small souvenirs wherever I go: pins, patches, t-shirts, and so on. I didn't buy one this time. In fact, I only spent money on food. (On our first day, we stocked up on groceries so that we could eat most of our meals in our room.)
For the entire week, there were two purchases that violated the rules I've set for myself.
While walking the dog last weekend, Kim noted that I've been getting a lot of packages in the mail lately. "What's up with that?" she asked.
"Remember how we shared that bottle of champagne on New Year's Eve?" I said. "Well, that got me buzzed enough that I sat down at my computer and ordered a bunch of used books. Mystery novels and manga. So, those are starting to filter in." That's right. I got drunk on New Year's Eve (because I no longer drink regularly, I've become a lightweight) and ordered old John le Carré paperbacks and Lone Wolf and Cub compilations from ABE Books. I lead an exciting life, my friends.
"Don't you have enough books?" Kim asked.
"Honestly, I do," I said. "And I haven't read half of them. I haven't watched half of the movies I've purchased. I haven't read half of my graphic novels."
"You only wear about half of the clothes in your closet," Kim added. We stopped to let the dog dig in the ditch. Tally was certain she smelled a rodent and was desperate to find it.
"Right," I said. "I know I'm not the only one who does this, but that doesn't mean I like it. I feel as if I ought to take a break from buying new stuff and just work through the books and movies and clothes I already own."
"I feel as if you ought to do that too," Kim said, laughing. Then Tahlequah saw a deer in the neighbor's field, and our conversation was forgotten in the ensuing excitement. Bark bark bark! Deers are evil.
Are you all ready for this? It's one of my favorite days of the year! I just spent an hour entering data in Quicken, then another thirty minutes analyzing it. It's time to run some numbers.
How well did I do with my financial goals last year? Was I able to cut back on dining out? (Hint: There was a global pandemic. What do you think?) Did my net worth rise or fall? Let's take a look.
First, let's review where I was at the end of 2019.
Quite simply, I was a mess. Objectively, my life was good, but subjectively it was a disaster. My mental health was in shambles. Depression and anxiety were crippling me and truly affecting my relationships with other people. I felt like I was in the middle of a prolonged car crash.
The good news is that, for the most part, 2020 was much better from a personal perspective. Yes, I understand that 2020 sucked for a lot of people. And it was the most tumultuous year our country has seen in a generation. But for me, personally, the year was mostly good. I'll explain why this is in a bit, but first lets look at the Big Picture.
My Net Worth
Here's my end-of-year net worth from each of the past three years. (These numbers do not include the value of my business or this website.)
- At the end of 2018, my net worth was $1,334,227 — a 15.2% decrease from 2017.
- At the end of 2019, my net worth was $1,437,543 — a 7.7% increase from 2018.
- At the end of 2020, my net worth was $1,373,233 — a 4.5% decrease from 2019.
Now, on paper a decrease of net worth amounting to $64,310 might seem scary. Maybe it's because I'm in a better mental space than last year, but it doesn't bother me. This may also be due to the fact that I realize most of that drop comes from Zillow's valuation of our home.
At the end of 2019, Zillow said our country cottage was worth $495,749. At the end of 2020, the home was valued at $437,127, which is a drop of $58,622.
Yes, I realize using Zillow to track our home value is...erratic. And it leads to fluctuations like this. Still, I feel like it's a solid enough source for home values, and it gives me some sort of number to go on.
That's one way of looking at it. But looked at another way, things are a little dicier. You see, I currently live off of my investments. Most of those investments are in retirement accounts, which I can't touch (unless I want a tax penalty) for another eight years. At the start of 2019, my regular taxable investment accounts contained $269,264. Today, they have $197,117. That there could also be my drop in net worth.
One thing is certain, though. That $197,117 isn't enough to get me to age 59-1/2 at my current level of spending. I need to spend less, earn more, or (preferably) both.
Now, let's look at some of the numbers in greater detail.
Ah, a brand new year.
Especially after the shitshow that was 2020, it's good to have the sense that we can begin anew, that we can shed some of those habits and behaviors that have been holding us down while adopting new patterns that lead us to become better humans.
I actually enjoyed a fruitful second half to 2020. I lost 24 pounds. I (mostly) gave up alcohol. I recorded 61 videos. I made progress in my fight against depression and anxiety. And, most importantly, I resumed the habit of writing every day.
In 2021, I want to build on this momentum. I want to continue these habits while incorporating a few new ones, such as tracking my time, keeping a personal journal, and — once I reach my target weight — exercising regularly once more.
There's one thing that often holds me back when I decide to make changes. It holds others back too. It's the overwhelming feeling that there's just so much to do — and that I've handicapped myself through poor choices in the past. I remember the physical feats I was capable of when doing Crossfit a decade ago, for instance, and I feel a sense of helplessness. I'm nowhere near as fit I was ten years ago. There's no way I can do that stuff today.
But I have to remind myself: It's not a competition. I ought not compare myself to others — or to my past self. My sole goal should be a better person tomorrow than I am today.
To do this, I must accept who I am, where I am. It sure would be nice if I were to start a fitness program in better shape than I currently am, but that's only a dream. If I want to change, I have to accept reality. I need to start where I am.
And if you want to change — if you want to master your money, your health, your relationships, your career — you too must start where you are.
As the financial independence and early retirement movement (or FIRE movement, for short) has gained popularity, some myths and misconceptions have sprung up about what it entails. Too many people make assumptions about what the FIRE movement is and what it's made of.
A lot of folks think the FIRE movement is cult-ish. Some think that financial independence and early retirement are only for rich white people. (Or, more specifically, for white men in the tech industry.) Others say that early retirement is only possible with a high income. Or you can only do this if you're so frugal it hurts. And, of course, there are folks like Suze Orman who "hate hate hate" the FIRE movement because they believe you need millions in order to retire — early or otherwise.
I'll be honest. Each objection and complaint about financial independence contains a grain of truth. But each objection and complaint misses the point in some important ways.
Today, let's look at some of these myths and misconceptions about financial independence and early retirement, and explore why these myths and misconceptions are myths and misconceptions.
Every year at about this time, I start getting questions by email and social media — and even in Real Life: "Do you have any personal-finance or money-related gift ideas?"
I know how tempting it can be to choose gifts that encourage smart financial choices. You look at the poor decisions your brother or sister have made, and you feel like you could help. If only they would read this one book that helped you so much!
I get it. I've felt the same way. After all, my financial turnaround is a direct result of reading two books that were gifted to me by friends: Your Money or Your Life and Dave Ramsey's The Total Money Makeover.
That said, money gifts like these can be dangerous. They have the very real potential to create hard feelings and resentment rather than achieve the goal you're after. Any time you offer unsolicited advice — especially in the form of a gift — you run the risk of making the recipient more resistant.
Now, having said that, there are times and situations where gifts with a financial theme make sense.
- Do you have a niece who's about to leave home and forge out on a life of her own? A money manual might indeed be a welcome gift.
- Are there kids in your life whose parents don't have personal finance figured out? A money-based board game could indeed impart lessons to the entire family.
- Has your father been talking lately about needing to take retirement seriously? Well, he probably could profit from a meeting with a financial advisor.
After fifteen years of thinking about this subject, I've come up with a short list of financial gift ideas that might help to foster smart money moves without creating resentment. Let's take a quick look at some potential personal-finance gifts that sometimes make sense — if the recipient is ready to hear the message.
Note that I've deliberately tried to steer clear of junk. There are tons of money-themed gifts out there that serve absolutely no purpose: money soap, money placemats, money t-shirts. These are all basically rubbish. The money gift ideas I've listed here are meant to be practical, to foster future wealth. They're not novelties.
Last week, my colleague Patrick from Cash Money Life pinged me on Facebook. "Hey, J.D. What are some of the other personal-finance conferences out there?" he asked. Patrick and I brainstormed a list of money events, and I realized that this might be useful for GRS readers.
(Well, this list might be useful eventually. Right now, during COVID, this list isn't useful to anyone haha.)
Here's a quick list of the various personal-finance events, conferences, and retreats that I'm aware of. If you know of others that should be on this list, please drop me a line. I'm happy to add them.
It's been quiet around here for the past few months. Generally when things go dormant at Get Rich Slowly, that's not a good sign. It usually means that I've sunk into the depths of depression, the pit of despair.
I'm pleased to report that in this case, that's not the issue. In this case, the opposite has happened. Lately, life is grand. During the past three months, I've been diligently working to eliminate the net negatives from my life while also emphasizing those things that are essential. To that end, I've:
- Recorded, edited, and published nearly 50 YouTube videos. These are rough, and I know it, but I'm learning from them — and having fun.
- Given up alcohol. And recently, I've given up pot. I'm experimenting with complete sobriety for a while.
- Lost nearly twenty pounds through simple, sensible eating (and calorie counting). This morning, I weighed in at 186.8, down 17.4 pounds since I started on July 28th.
- Cleaned and organized nearly every space in my life, "editing" my belongings in an attempt to cut back to the essentials.
- Worked hard in the yard. I've built a fence with one neighbor and am starting another fence with a second neighbor. Plus, I've continued our landscaping projects.
- Begun reading again for pleasure. Yay!
- And much, much more.
I've had a busy three months. And while, yes, I've had a few bouts of depression, they've been minor and brief. Mostly, I've been happy and productive.
Not much of that productivity has been directed at this website, and I'm okay with that. I know there's plenty of personal finance inside me ready to be shared in due time.
Meanwhile, it's been rewarding to devote so much time to essentials, to the core concerns of my life.
My world is on fire.
As you may have heard, much of Oregon is burning right now. Thanks to a "once in a lifetime" combination of weather and climate variables -- a long, dry summer leading to high temps and low humidity, then a freak windstorm from the east -- much of the state turned to tinder earlier this week. And then the tinder ignited.
At this very moment, our neighborhood is cloaked in smoke.